Manufacturing facility management use metrics to measure the productivity of a manufacturing facility, and to determine what changes can be made to improve the operation of the facility. Metrics are used because generally it is difficult for any one person to otherwise understand how a large, complex system such as a manufacturing facility is performing. The choice of metric is important because changes that improve the facility as measured by the chosen metric are judged to be worthwhile and are encouraged by facility management. Changes that deplete the operation of the plant, as measured by the chosen metric, are judged to be detrimental to the operation of the facility, and are therefore discouraged by facility management.
One metric that is used is the “idle time” of resources such as employees and equipment. Sometimes also referred to as the “utilization” or “efficiencies” of those resources, the metric measures the amount of time that the resources are busy. Other metrics that have been suggested in the art, for example in the book THE GOAL, by Eliyahu M. Goldratt and Jeff Cox, first published in 1984, are the measurements of throughput, inventory, and operating expense. Throughput is defined to be the rate at which a system generates money through sales. Inventory is defined to be all the money that the system has invested in purchasing things that it intends to sell. Operating expense is defined to be all the money the system spends in order to turn inventory into throughput. (See Goldratt and Cox, pp. 60–61.) These three metrics can be used to measure overall profitability as well as the profitability of any element within a manufacturing system. For example, the “throughput value” of any element can be determined by calculating the amount that the element contributes to the generation of profit through sales.